By Duane Gangwish

    Nebraska has, as some have coined it, the Golden Triangle ‑ cattle, corn and ethanol! As I see it, the glass is half-full and the glass is getting bigger.

According to the Nebraska Ethanol Board, Nebraska has 12 operating ethanol plants, 9 under construction and 23 more are in some stage of development. Ethanol production in 2005 reached 543 million gallons and, when plants currently under construction come on line, production by 2007 is projected to exceed 1 billion gallons. No one can accurately predict the future but, if all of the 23 proposed plants are built and produce their projected volume, Nebraska could produce over 2 billion gallons.

Ken Cassman, UNL professor and director of the new Nebraska Center for Energy Sciences Research, told a group recently that Nebraska is poised to win the ultimate trifecta with cattle, corn and ethanol. He said we have other ace cards, too, including major rail and surface transportation and water.

Well, what about…?

I have heard concerns that at the current rate of growth, the ethanol industry may over build. Then what? One only needs to look back and observe cattle-feeding history to know that if expansion occurs on margin financing during times of high profit, there will come a day of reckoning. When that happens, the “broke” will be purchased at a discount by the prudent and the wheels will keep turning without missing a lick. Domestic and international energy policy in this country is demanding less dependency on foreign oil. The environmental community is demanding cleaner air and the fuel additive MTBE is dying an extraordinarily fast death. Somebody somewhere will produce the 7.5 billion gallons of fuel alcohol mandated by Congress in the last energy bill. I ask, why not here and why not now?

Another worry is that 2 billion gallons of ethanol will use up all the corn in Nebraska. Nebraska Corn Board data indicates that during the last 6 years, Nebraska’s average annual corn production was 1.13 billion bushels, of which about 480 million is exported annually. The increased ethanol production would consume roughly the amount we now export. I ask the question, how is that bad for Nebraska? I think it’s called value-added agriculture when you process the raw material here at home and sell the refined stuff (pun intended) somewhere else.

Others have lamented the escalating corn prices due to increased demand by ethanol plants. Have our farmers not complained (my family included) that the price of corn has been the same for the last 50 years? This will have an impact on feed costs for all livestock sectors; however, Nebraska cattle feeders are already beating the pants off the High Plains cost of gains by 5 to 8 cents a pound. Do you know where they get a lot of their corn? Yep, Nebraska. If corn prices go up here because of demand, corn prices will have a corresponding rise in the major feeding areas of the South, and Nebraska will still have the wet distillers grains (WDG).

Where will it all go?

The final point, and most exciting question for Nebraska’s cattle industry is, how are we going to utilize the WDGs from 2 billion gallons of ethanol production? UNL ruminant nutritionist Terry Klopfenstein believes there are four equally viable and simultaneous answers to the question: 1) feed more to current consumers; 2) move the product farther; 3) increase use in the beef cow herd and stocker operations; and 4) grow the feeding sector of Nebraska.

Consultants across the state tell me the average feeding rate of WDGs is 25 to 30 percent of the DM ration. Klopfenstein indicated that UNL has fed cattle on nearly 100 percent byproducts. I joked with Klopfenstein that there are thousands of research trials looking at the incremental addition of alternative feedsuffs in cattle diets, but who in Nebraska would have ever dreamed of considering corn as an alternative feedstuff? Moving the product farther may be accomplished by partially drying the product to decrease transportation costs, making western Nebraska closer in freight terms. Several Nebraska plants are capable of producing this drier, “modified” WDGs. Cow-calf and stocker operations can use WDGs very effectively once we solve some of the handling and delivery challenges. Klopfenstein said several ranchers are feeding WDGs on the ground. Extension and NC have received inquiries from grain producers about dry-lotting cows in the summer and then grazing stalks all winter. Finally, Nebraska cattle feeders could use every pound of WDGs from the projected growth by simply expanding its cattle-feeding capacity by 20 to 25 percent, or 500,000 to 600,000 head.

To date, NC staff and leadership have met with 31 of the 46 candidates for Legislature and the consistent message we have been driving home is that, although there is an exuberant climate for expanding ethanol production in Nebraska, there appears to be a climate of opposition to growth in livestock production. Nobody is advocating building 10 new 50,000-head feedlots or 50 new 10,000-head yards. What would be best for every Nebraska community, county and school district is to spread the growth from Rulo to Crawford and from South Sioux City to Haigler. A rising tide raises all ships!

Sales from cows, calves and fed cattle in Nebraska (excluding meat) amount to $6.5 billion. You want to talk about economic development? The growth I have described could increase that to well over $7 billion. Add to that the multiplier effect the economic impact has on Nebraska, which could be $2 billion. There is no viable proposal that remotely compares to what Nebraska is being offered. I say the time is now to fill the glass!    Duane Gangwish is NC’s vice president of technical services.